Business failure is when a company becomes insolvent and can no longer meet its financial obligations, leading to business closure and liquidation.

Primary Implication

If you ever ask yourself, why don’t I have any money in the bank you are a “by chance” business owner. If you aren’t budgeting your expenses against your planned sales volume, then you are likely to spend more money than should be. Do this for too long, and you will go out of business.

Overview

Businesses fail because their owners don’t understand how to play the game of business to win. They are “by chance” business owners who never bother to learn what the core elements of the game of business are, nor do they take the time to learn how their profits and cash reserves determine their excellence of play score. As a result, they struggle with ineffective management and no money.

Without an understanding of how to manage cash for profit, “by chance,” business owners fail to never know, with certainty, the next smart move to make in their business. They never appreciate how their financial statements give them most of what they need to play their game of business smarter today than they ever have before. As a result, they don’t use their P&L Statement nor Balance Sheet to improve the quality of their profits.